FCA Pledges $5.7B Investment in Italian Auto Plants

Plans call for new 500 EV and Alfa Romeo hybrid.

FCA CEO Mike Manley signed off on a $5.7 billion investment plan in the company's facilities in Italy.

Fiat Chrysler Automobiles said this week that its plants in Italy would return to full employment with a $5.7 billion investment in new cars and engine technology, including a fully electric version of the Fiat 500 city car and a plug-in hybrid Alfa Romeo compact utility vehicle.

The FCA announcement plans to mollify anxious union workers – and uneasy political factions in its home country – offer a sharp contrast to the tack taken by General Motors Co., which announced plans to close seven plants and eliminate 15,000 jobs.

GM’s announcement angered union officials in the U.S. and Canada as well as figures from opposite end of the political spectrum, such as U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau.

FCA is also expected to face pressure from the United Auto Workers and Unifor, the Canadian auto workers union, for further details on its future investment plans in the U.S., Canada and Mexico. FCA, however, is in the process of completing major investment in new products and equipment at plants in Toledo, Ohio, Sterling Heights, Michigan, and Belvidere, Illinois.

During a meeting with unions representing Fiat Chrysler Automobiles N.V.’s Italian workers, FCA’s top executive said they plan to invest $5.7 billion in 13 new or restyled models during the next three years.

Part of the new $5.7 billion investment in Italy will result in a new battery-electric Fiat 500.

(FCA, Honda and VW lead October auto sales. Click Here for the story.)

FCA CEO Mike Manley, who replaced Sergio Marchionne in July, said during the meeting in Turin that the automaker would also continue its developing hybrid and fully electric engine technology.

The Italian unions have been seeking reassurances for Italy’s under-utilized plants since a new five-year strategy was announced in June. The five-year plan was assembled under Marchionne’s watchful eye prior to his sudden death.

“It is a courageous plan in a difficult context, in which, for example, the U.S. automotive industry is significantly reducing its workforce,” said the secretary general of the Uilm metalworkers’ union, Rocco Palombella.

The all-electric 500 will be built in Mirafiori, in Turin, while the Alfa Romeo utility vehicle will be built in Pomigliano, near Naples, along with a mild hybrid version of the compact Panda, according FCA executives.

The company plans to build a hybrid for Alfa Romeo with the new investment.

A big part of the investments in Italy will focus on the development of electric and hybrid models and the creation of common platforms that can be used to develop different vehicles to boost efficiencies and flexibility, he added.

“These are investments that are capable of being implemented and kick off tomorrow morning,” said Pietro Gorlier, who took over management of FCA’s operations in Europe last month. Gorlier also noted that additional plans for Italy and other plants in Europe – in Poland, Serbia and Turkey – would be announced later.

(To see more about FCA’s plan to move Ram pickup production out of Mexico, Click Here.)

FCA’s operating margin in Europe improved to 3.2% last year, but this compares with rival carmaker PSA Group’s global automotive margin of 7.3%, analysts noted FCA expects its margin to grow to between 5 and 7% by 2022, according to the plan outlined in June.

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